Although article 1277 Italian Civil Code clearly states that "pecuniary debts" must be paid with legal tender currency, this has not always been really possible for years. For some time now cash payments have been restricted in Italy to an overall total value of Euro 12,500.

New legislation coming into force on 30.04.2008 will further reduce the limit of cash payments in Italy to an overall amount of Euro 5,000 or the equivalent in any other currency. The same legislation also provides that Italian banker's drafts (Assegni circolari) for a value in excess of Euro 5,000 will have to bear the full name of the beneficiary and the wording "a/c payee only" (Non trasferibile) which prevents indorsement of the same banker`s draft to third parties / beneficiaries.

From the same date all Italian ordinary bank cheques, which previously could be freely transferred to third parties, will also include the same clause preventing indorsement to third parties, whatever the value. Bank cheques will then be payable only into the bank account of the named beneficiary.

It will still be possible to have ordinary bank cheques which may be transferred to third parties, but a special stamp duty tax (Imposta di Bollo) of Euro 1.5 will be payable for each such "order" bank cheque. In addition, the indorsement on the cheque itself will also have to include the Italian tax code (Codice Fiscale) of the transferee, the final beneficiary.

The same overall limit of Euro 5,000, will also apply to bearer bank deposit account pass books issued by banks or Post Offices, in Italy. Any breach of this new legislation, which was introduced in Italy last year to fight crime generally and money - laundering in particular, in compliance with two EU Directives, is sanctioned with heavy penalties.

The same new legislation introduces with effect from December 2007 strict rules applicable to all bank and professionals operating in Italy (accountants, lawyers etc.) which have already been in force in the UK for some time.

Italian banks and professionals are now under a strict duty to identify their clients (Obbligo di adeguata verifica della clientela ) and to keep such records for 10 years.

Where any suspicious transaction comes to their attention, professionals in Italy now have a duty to report it (Segnalazione di operazioni sospette) either to their professional bodies or to the relevant Italian authorities.

Avv. Claudio Del Giudice
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12th March 2008